Before any paperwork: can you name, in one sentence, what someone is paying you for? "I clean commercial offices in Plano." "I do bookkeeping for daycare owners." That sentence determines everything else — your structure, your licenses, your insurance.
Vague ideas produce vague businesses. If you can't say it in one sentence, you're not ready for step two — and that's fine, spend another week on it.
This decides your taxes and whether your personal assets are protected if something goes wrong.
| Structure | What it means | Best when |
|---|---|---|
| Sole Proprietor | You and the business are the same legal entity. No protection. | Testing an idea, very low risk, no employees |
| LLC | Separates your personal assets from business debts and lawsuits | Most small businesses — the common default |
| S-Corp | A tax election (not a structure) that can lower self-employment tax | Once profit is consistent — usually $40k+/yr net |
The thing most people get wrong: an LLC and an S-Corp aren't either/or. You can form an LLC and elect S-Corp taxation later. Start with the LLC.
Official guide: SBA — Choose a Business Structure
Registration happens at the state level, not federal. Search "[your state] secretary of state business filing." Filing fees typically run $50–$300 depending on the state.
You'll also want to check that your name isn't already taken — most Secretary of State sites have a free business name search.
An EIN (Employer Identification Number) is your business's tax ID. You need it to open a business bank account, hire anyone, or file business taxes.
Do this immediately. Mixing personal and business money is the fastest way to lose your liability protection in court — and it turns tax season into a nightmare.
Bring: your registration documents, your EIN, and your ID. SBA guide
What you need depends entirely on your industry and location. A cleaning company, a daycare, and a food truck have completely different requirements.
Decide before your first customer, not during. At minimum: a way to send invoices, a way to accept card payments, and a system for tracking who owes you what.
This is where most new businesses stall. The paperwork is done, the account is open, and then… silence. Because nobody knows you exist, nobody answers the phone when they call, and the leads that do come in get lost in a text thread.
You need three things: a site people can find, a way to answer every call, and one place where every lead lands.
XPI builds the website and the system behind it — AI receptionist that answers 24/7, tap-to-connect cards, and a CRM where every lead lands. Free 20-minute growth audit, no pressure.
Book Your Free Growth Audit →| Item | Typical cost |
|---|---|
| State LLC filing | $50 – $300 (varies by state) |
| EIN | Free |
| Business bank account | $0 – $25/mo |
| General liability insurance | ~$30 – $80/mo |
| Licenses/permits | Varies widely by industry |
Start with the official source before any lender pitches you: SBA Funding Programs covers loans, grants, and investor basics. Be skeptical of anyone guaranteeing you a grant for a fee — legitimate federal grants are listed publicly at Grants.gov.
The paperwork is the easy part — most of it is a weekend of work and a couple hundred dollars. The hard part is everything after: finding customers, answering the phone, following up, and staying consistent when nothing's happening yet.
Do the steps in order. Don't skip the bank account. Don't pay for the EIN. And don't wait until everything is perfect to tell people what you do.